Friday,
July 16, 2021

Market recap

Dow Jones

34,987.02

+53.79 (+0.15%)

S&P 500

4,360.03

-14.27 (-0.33%)

Nasdaq

14,543.13

-101.82 (-0.70%)

Boston Beer

$932.265

+$12.72 (+1.38%)

Lyft

$54.73

-$1.10 (-1.97%)

Morgan Stanley

$92.525

+$0.065 (+0.07%)

Amid evolving news surrounding COVID-19 and the economic reopening, your financial needs are our top priority. For more information,click here.

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Top Story

Instacart Takes a Bite Out of Advertising

Changes for the Grocery Delivery Industry

Instacart, the grocery delivery app which surged in popularity during the pandemic, is now searching for new growth opportunities. Instacart controlled about 20% of the grocery delivery market before COVID-19 hit in the US, but jumped to about 54% at one point last year amidst lockdowns. Its market share has fallen to 45% recently as competition in the grocery delivery industry heats up.

Increasing labor and transportation prices are also weighing on Insacart’s margins. The company sees advertising as an important new frontier as it works to maintain its momentum from the past year.

High-Profile Hires

Last week, Instacart announced that Fidji Simo will replace founder Apoorva Mehta as CEO starting in August. Simo comes to Instacart from Facebook (FB) where she was in charge of launching ads on Facebook’s News Feed. She also led the effort to monetize mobile ads on Facebook.

Instacart’s decision to bring Simo aboard as CEO signals it has big ambitions for its advertising business. The company has also made recent high-profile hires from Amazon (AMZN) and Google (GOOGL)’s advertising divisions.

Gearing Up for an IPO

Instacart’s advertising business earned about $300 million last year. It aims to grow that number to $1 billion by next year. Investors will be watching closely to see if Instacart can meet this goal as it gears up for a highly anticipated IPO.

Food delivery companies have a notoriously hard time turning a profit. Additionally, some investors are worried that as consumers feel more comfortable going to restaurants and grocery stores in person, demand for food delivery will fall. Regulations surrounding gig-economy work are also a concern for the future of food delivery companies. Advertising tends to be high-margin and scalable, so Instacart sees investing in advertising as a helpful way to navigate a changing market.

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Beam Suntory and Boston Beer Collaborate on New Products

Fresh Drinks Will Debut in 2022

Beam Suntory (STBFY) and Boston Beer (SAM) are entering a partnership to create new products in response to consumers’ changing alcohol preferences. Beam Suntory owns spirits brands including Jim Beam and Maker’s Mark. Boston Beer’s brands include Samuel Adams, Angry Orchard Hard Cider, and Truly Hard Seltzer.

The companies are collaborating on new products which will debut in mid-2022. They first plan to use Beam Suntory’s Sauza brand to create a ready-to-drink beverage and to bring Boston Beer’s Truly Hard Seltzer into the spirits category.

Pandemic Alters Alcohol Preferences

Many alcohol companies are in the process of adapting to changes in demand. The pandemic altered people’s socializing and drinking habits and some of those changes are here to stay. For example, the ready-to-drink canned cocktail category grew by 50% between 2019 and 2020. While bars were shuttered, people flocked to buy premixed drinks.

This segment still only accounts for about 3% of spirits sales in the US, but alcohol makers are betting it is poised for growth—even as consumers return to their pre-pandemic habits. Pre-mixed cocktails became popular during the pandemic and now some people are seeking out these drinks at bars.

A History of Working Together

Boston Beer CEO Dave Burwick and Beam Suntory CEO Albert Baladi have a long history of collaborating. They first met when they both worked at PepsiCo (PEP) and have kept in touch for years. They believe that their experience working together will help foster a symbiotic relationship between the companies they lead.

Boston Beer and Beam Suntory will depend on each other for expertise in various categories of the liquor market. They will also use each other’s distribution networks as they bring their new products to consumers across the country. As the pandemic subsides, people are toasting a post-COVID future. However, many people’s drink preferences have changed over the past year and beverage companies are finding ways to respond.

Friday Fundings: Flipkart, Revolut, and Cybereason

UK Fintech App Rakes in $800 Million

Revolut, an app which provides financial services including banking, investing, and currency transferring, has secured $800 million in funding after a Series E round. The London-based company is now valued at $33 billion, making it one of the most valuable UK fintech firms. Softbank Vision Fund 2 and Tiger Global co-led the round.

About a year ago, Revolut closed a $580 million Series D funding round. Since then, its valuation has soared and is currently six times what it was last year. The company’s revenue increased 57% between 2019 and 2020 as the world embraced digital payments during the pandemic. Revolut has more than 16 million customers currently. With its new funding, the startup wants to grow its user base and find ways to encourage users to spend more time on and put more money into the app.

P.S. SoftBank is also a SoFi investor.

AI-Powered Cybersecurity Company Raises $275 Million

Cybereason, a cybersecurity startup, has raised $275 million in a Series F funding round led by Liberty Strategic Capital, a VC firm founded by Steven Mnuchin, the former US Treasury Secretary. The company did not disclose its post-funding valuation, but it is estimated to be about $3 billion. This funding round is likely the company’s last before it makes its public debut.

Cybereason ended 2020 with more than $120 million in annual recurring revenue. Consumers have been drawn to Cybereason for its AI-powered cybersecurity technology. Its platform is operation-centric, rather than alert-centric. The company says this speeds up the process of investigating and recovering from cyberattacks.

Not-So-Breaking News

  • Blue Origin, the space venture owned by Jeff Bezos, announced that 18-year-old Oliver Daemen will fly to the edge of space in place of an anonymous person who won an auction for the spot for $28 million. Bezos, his brother Mark, and aerospace pioneer Wally Funk will also be aboard the rocket, which is scheduled to blast off on July 20.

  • Lyft (LYFT) is reinstating the option for shared rides on its app for the first time since the pandemic began. Starting on Monday, riders in Philadelphia, Chicago, and Denver will be able to use the service. Passengers and drivers will be required to wear face masks while in the car.

  • Taiwan Semiconductor Manufacturing Co. (TSM) raised its sales outlook, saying it expects sales to increase by over 20% in 2021. The company, which supplies chips to Apple (AAPL) and many of the largest auto manufacturers, is ramping up production in an effort to alleviate the global chip shortage.

  • Morgan Stanley’s (MS) earnings beat Wall Street estimates thanks to strong performances from its stock trading and investment banking divisions. Its revenue was $14.8 billion, significantly higher than expectations of $13.98 billion.

  • Cinedigm’s (CIDM) stock price surged after the video distributor shared that its overall revenue increased 6.9% last quarter. This was thanks to a 25% increase in its revenue from content and entertainment, which offset a decline in its cinema equipment business.
  • Buying a house for sale by owner is one way to save money on real estate, but having your own agent onboard may be a good idea. Get more tips and tricks with this SoFi Learn article.

Financial Planner Tip of the Day

“While not everyone loves the idea of budgeting, taking a moment to assess and prioritize your spending can yield some real rewards. Even a basic monthly budget can help you reach your financial goals, whether it’s to have a financial cushion, put a downpayment on a new home, go on your dream vacation, or all of the above.”

Brian Walsh, CFP® at SoFi

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